Matal v. Tam: The death knell of the Lanham Act’s Disparagement Clause and implications for the fashion industry

Matal v. Tam: The death knell of the Lanham Act’s Disparagement Clause and implications for the fashion industry

By

Laura Chubb

lchubb@haugpartners.com

Joseph Saphia

jsaphia@haugpartners.com

Haug Partners LLP

Ben Natter

BNatter@haugpartners.com

Haug Partners LLP

21 Jul 2017 , 1:55pm

Fashion companies may choose more controversial brand names moving forward following the Supreme Court's decision over disparaging names when it paved the way for disparaging trademarks to be registered.

On June 19, 2017, the United States Supreme Court delivered its decision in Matal v. Tam, which addressed the issue of whether a disparaging trademark can be federally registered. The Supreme Court unanimously ruled that the United States Patent and Trademark Office’s (USPTO) denial of an application for service mark registration for the mark THE SLANTS on the basis of the mark being disparaging was incorrect, and that the disparagement clause of the Lanham Act violated the Free Speech Clause of the First Amendment of the United States Constitution.

As background, Simon Tam filed a service mark application for the mark THE SLANTS in connection with entertainment services offered by his band, The Slants. The term “slants” can be used as a “derogatory term for persons of Asian descent.” The USPTO denied the application because the term “The Slants” may “‘disparage . . . or bring into contempt, or disrepute’” any “‘persons, living or dead.’” Tam appealed the USPTO’s decision to the U.S. Court of Appeals for the Federal Circuit. That court sitting en banc held that the disparagement clause violated the First Amendment’s guarantee of free speech. The court held that the government may not “penalize private speech merely because it disapproves of the message it conveys.” The Supreme Court granted the USPTO’s writ of certiorari.

In an opinion by Justice Samuel Alito, the Supreme Court affirmed the Federal Circuit’s decision that the disparagement clause violates the First Amendment’s guarantee of free speech. A unanimous Court held that the disparagement clause violated the Free Speech Clause of the First Amendment because “[i]t offend[ed] a bedrock First Amendment principle: Speech may not be banned on the ground that it expresses ideas that offend.”

The Court’s opinion analyzed three main arguments in determining the unconstitutionality of the disparagement clause: (1) whether trademarks are government speech, as opposed to private speech; (2) whether trademarks are a form of government subsidy; and (3) whether the constitutionality of the disparagement clause should be tested under a new “government-program” doctrine. The Court rejected all three arguments.

According to the Court’s ruling, trademarks are private speech—not government speech. The Court noted that while trademarks are registered by the USPTO, a government agency, the Federal Government “does not dream up these marks, and it does not edit marks submitted for registration,” except as required by 15 U.S.C. §1052(a). Furthermore, a trademark examiner “does not inquire whether any viewpoint conveyed by a mark is consistent with Government policy . . . .” Indeed, registration of a mark does not constitute approval of a mark. The Court commented that “[i]f private free speech could be passed off as government speech by simply affixing a government seal of approval, government could silence or muffle the expression of disfavored viewpoints.”

Additionally, the Court also determined that trademarks were not a form of government subsidy, as the government does not confer a pecuniary benefit upon the trademark applicant. The Court was unpersuaded by the government’s argument that “registration provides valuable non-monetary benefits that ‘are directly traceable to the resources devoted by the federal government to examining, publishing, and issuing certificates of registration for those marks.’”

Finally, the government argued that the disparagement clause should be upheld as “a new doctrine that would apply to ‘government-program’ cases.” Instead, the Court restated the constitutional tenet that the public expression of ideas may not be prohibited simply because some members of the public find the ideas to be offensive.

The Court’s decision struck down the disparagement clause of the Lanham Act’s § 2(a), which stated that a trademark shall be refused if it consists of 'matter which may disparage or falsely suggest a connection with persons, living or dead, institutions, beliefs, or national symbols, or bring them into contempt or disrepute.'

The implications of this decision 'will open the door to efforts to register trademarks that – unlike ‘The Slants’ – are intended to disparage certain people or groups.'

With respect to the implications this decision may have on the fashion industry, there is likely to be an influx of applications to register trademarks for formerly considered disparaging marks for use in connection with clothing and apparel. Additionally, fashion designers and fashion companies may now seek to register more controversial brand names.

As a direct result of the decision, apparel companies and entrepreneurs may choose more controversial brand names moving forward and/or seek to “reclaim” a term or gesture and negate underlying stereotypes or meanings associated with the term or gesture. Moreover, the decision also may be helpful to brands that previously operated without trademark protection in the United States due to their mark being disparaging.

Furthermore, this decision may pave the way for additional challenges to the constitutionality of other Lanham Act exclusions, including denials of applications for registration of marks deemed to be scandalous or immoral. The Supreme Court’s rejection of the constitutionality of the disparagement clause thus opens the door to trademarks that may have previously been rejected by the USPTO, expanding the understanding of free speech as it pertains to these applicants, even for marks that are more overtly offensive.